TFCIL—TOURISM FINANCE  CORPORATION LTD.

CMP 28.5, MARKET CAP AROUND 226 CRORES,  BV  38 ,P/BV 0.7, NIM for fy 10 was 3.5%

The company was promoted by various financial institutions and banks to provide finance to projects realted to tourism sector.

Currently the promoters include:

IFCI—33.04%

SBI –  09.19%

LIC --  07.70%

BOI – 4.70%

OTHERS INCLUDING UNITED INSURANCE CO(1.75%), ORIENTAL INSURANCE CO.(1.29%)

TOTAL PROMOTER HOLDING IS 57.55%        

YEAR	MARCH 05	MARCH 06	MARCH 07	MARCH 08	MARCH 09	MARCH 10
SALES	81	64	63	58	71	80.07
NP	14.22	11.85	14.28	21.73	29	34.07
NPM%	17.58	18.39	22.59	37.32	40.83	42.55
EPS	2.11	1.76	2.12	2.7	3.59	4.22
EQUITY	67.42	67.42	67.42	80.72	80.72	80.72

 

Dividend for FY 10 was Rs 1.2 per share and at around 28.50, it amounts to around 4% div yield.

EXISTING PROMOTERS WERE ALLOTTED 1.33 CRORE SHARES AT A PRICE OF 48 IN FEB 08, WHICH EXPLAINS THE HIGHER EQUITY FROM MARCH 08.

IFCI RAISED ITS STAKE IN THE COMPANY BY ABOUT 2%(16.4 LAC SHARES) THROUGH  MARKET PURCHASE BETWEEN 26 NOV 08 TO 29 MARCH 2010.

DURING Q4 FY 10, GROSS NPA REDUCED TO 2%, DOWN FROM 3.6% FROM EARLIER QTR. IN ABSOLUTE TERMS, IT WAS 14 CRORES.  NET NPA IS ZERO.

CAPITAL ADEQUACY AT AROUND 58% AS AT END OF MARCH 10 QUARTER.

New Development:

TFCIL is planning to enter infrastructure project financing business especially power project financing.   Normally, TFCI provides long term funding usually for 10-12 years, and hence it is better suited to finance power projects which have a long gestation period.

POSITIVES

Good growth expected due to credit demand from hotel sector and infra financing foray

Net NPA zero

Good dividend yield around 4%

Cheap valuations at around 0.7 times book value and a PE of around 7

RISKS:

Prolonged recession could lead to rise in NPAs

Factors which can affect the tourism industry could indirectly affect the company’s performance.

 

TECHNICAL VIEW:

After posting a high of 55.50 in Jan 08, the stock fell down and formed a low of around 12.5 (double bottom) in Oct 08 and March 09. Since then the stock has been in a strong uptrend and since May 09, is in an upward sloping channel with lower end channel support around 26(200 dema is also around 26) and channel resistance around 37 currently.

Based on fundamentals and technical parameters, stock looks a good investment bet to be accumulated on declines.

 

 

 

 

Hitesh,
Excellent write up. This is a very good stock to trade. I know someone who has been trading in it since a long time and has build up a decent amount of capital doing so.
 I think it is a safe stock to invest too as there will be higher growth prospects in Infrastructure financing.

Good call.



Edited by tejas - 09/Jun/2010 at 10:52pm

Originally posted by iaditya Sales doesnt seem to be doing much. not sure why profits are changing.

The company was facing some rough weather till 2007 bcos of tourism industry downturn. But if u see the results since 07, there is definite improvement. Plus promoters have pumped in a good amount of money at a high premium so capital adequacy is quite good.

While looking at this stock, one needs to understand why there were problems and how the future could pan out.

Originally posted by Alok Bhola 1. What is the competitive advantage this NBFC has over other NBFCs / Banks ?2. The public sector pedigree does not inspire any confidence.

Competetive advantage is their experience in dealing with the tourism sector and hence better knowledge of the business. Another plus is the longer term nature of the loans which banks might not be interested. And they are dealing with two sectors which will always witness credit demand--tourism and infrastructure. I expect the company to witness around 15-20 CAGR in sales and net profits for next 2-3 years.

About public sector tag, there is no choice. I like what they have done in the last three years, their NPMs, and the dividend yield which offers some downside protection.
There could be an indirect trigger in the form of ifci divestment which might prompt some sort of management change. But this should not be considered an investment argument.